TMI Blog1994 (7) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 194C of the Income-tax Act, 1961, applicable to payments made to the advertising agencies for professional services rendered by them. The arguments were advanced before us by learned counsel for the petitioners in regard to the scope and ambit of section 194C of the Act. It was stated that the said section had throughout been construed by the Ministry of Finance and by the Central Board of Direct Taxes as not applicable to payments made to advertising agencies for professional services rendered by them. It was a long 20 years after the incorporation of section 194C in the Act that the Central Board of Direct Taxes has reversed its interpretation purportedly on the basis of the decision of the Supreme Court in Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994, we have held that the provisions of section 194C do not apply to contracts for mere carriage of goods, i.e., transport contracts. The ratio of the above two decisions squarely applies to the case of payments made to advertising agencies for professional services rendered by them. In this connection, it may be expedient to mention that by Circular No. 93 dated September 26, 1972, issued by the Deputy Secretary to the Government of India in reply to a query whether the requirements of section 194C would apply to payments made to advertising agents rendering professional services, it has been categorically stated that service contracts not involving carrying out of any work are outside the scope of section 194C. Earlier also, by Circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on section 194C of the Act to include not only works contracts but also labour contracts. Following the ratio of the above two decisions of this court, we hold that the impugned circular of the Central Board of Direct Taxes, dated March 8, 1994, is illegal and without jurisdiction in so far as it requires deduction at source from payments made to advertising agencies for professional services rendered by them. In the result, this writ petition is allowed in the above terms. Under the facts and circumstances of the case, we make no order as to costs. Certified copy expedited. Mr. Jetley applies for stay of this order for four weeks. Considering the facts and circumstances of the case, the prayer is rejected. - - TaxTMI - TMITa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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